Thursday, 4 December 2014

1) It's called "Stamp Duty Land Tax" (or "SDLT" for short), not "Stamp Duty", the latter is a 0.5% tax on the sale of shares and is similar in origin but different enough to warrant a different name.

2) SDLT is a very bad tax of course. Although it is a tax on land values, it is not an annual recurring has (which encourages efficient use of land and falls on the unearned element), it is a tax on transactions (thus discouraging efficient use of land). As to the economic incidence, it is born wholly by the seller, but that's a bit academic as two-thirds of people selling are also buying, so it's a huge handful of grit in the system. So it pushes selling prices down, but purchasers don't really benefit.

3) One of people's main gripes with it was the slab structure. So the SNP changed all that a couple of months ago for Scotland (starting next year).

4) The Lib-Cons seem to have done a mish mash of the recent SNP changes and the previous system. Below are two charts comparing the bills under the previous rules; the LBTT rates in Scotland from next year; and the SDLT rates in rUK from today.

The first covers homes up to £400,000, which is nine-tenths of all homes, you can still find an OK family home in parts of London for that much

The second includes all homes up to £2 million, there are only about 100,000 which would sell for more than that. In fact, there are only about 400,000 homes worth more than £1 million. Anybody with that much money (or a house worth that much) clearly has got more than any household could ever sensibly need.

So, to the extent that we should have SDLT or LLBT at all (and we shouldn't), the rUK SDLT system seems a lot more sensible than the Scottish LLBT one, and certainly a tad more sensible than what went before.